Friday, 2 November 2012

New defence procurement procedure in early 2013

By Ajai Shukla

Business Standard, 2nd Nov 12

A top defence ministry (MoD) official today
revealed that the Defence Procurement Procedure of 2011 (DPP-2011), which
governs the procurement of military weapons and equipment would be modified in
early 2013.

“The Defence Procurement Policy is
undergoing changes; and the 2013 edition of the DPP will come out early next
year,” said Air Marshal M Matheswaran, the Deputy Chief of the Integrated
Defence Staff (IDS), addressing a KPMG-organised defence industry gathering in
New Delhi.

He said that the new DPP would liberalise
defence procurement further. This conformed to industry expectations, as it has
been the trend in successive modifications to the DPP in 2005, 2006, 2008 and
the currently valid DPP-2011.

Matheswaran urged private industry to focus
less on the high value, high technology weapons platforms (e.g. aircraft and
tanks) on which the big defence money is spent. Instead, suggested Matheswaran,
private industry should emulate the auto parts industry by setting up
manufacturing units that were part of a global supply chain. These small units
would form the backbone of a countrywide defence industrial base.

In the MoD’s planning, such a defence
industrial backbone is crucial for maintaining, repairing, overhauling and
upgrading the complex defence platforms that are currently being bought
overseas and manufactured under licence in India.

“Rather than focusing on large weapons
systems integration and manufacture as the only way, I think we need to break
down the supply chain into many component parts, so that you become part of a
global supply chain. If you look only at the Indian military as the only source
of your order book, then you’re not going to have continuous orders for any
length of time,” said Matheswaran.

The IDS deputy chief urged industry to
develop small and medium enterprises (SMEs), which would produce the components
that would go into larger and more complex system that would eventually be
built by large conglomerates like the Tatas, L&T and the Mahindras.

Highlighting the “enormous” opportunities
for private industry, Matheswaran pointed out the scope for India’s capital
expenditure to grow from its current Rs 80,000 crore. “Our defence budget is
still much less than the global average of three per cent of GDP. We haven’t
exceeded even two per cent of GDP,” he said.

Sir, what are ur views w.r.t PRC's SAC J-31/FC-60's first flight? Will it force MoD and DRDO to speed up the R&D on AMCA? We still think it can be achieved with full efforts by pvt. Sector and various institutions such as IITs/NITs..

It is high time India looked at reorganizing the Defence Research / Development / Production Sector. DRDO cannot be the sole agency doing research and development as this is not healthy and it is proven that competition leads to better results. DRDO has to become a controlling and program management agency and manage the research and development of defense equipment based on competition between private and public sector.

you havn't provided... stats of offsets... target... achived... actual... based on dpp... 2005... 2006... 2008... 2011... 2013... till date... then only we public... hav some sense of these policy... upgrades/downgrades...

I think this is flip flop. Till recently big indigenous manufacturing companies were led to believe by the MOD that should build fast infantry combat vehicles, ships and assemble helicopters and warships and so on. Now they want them to become Tier-2 or Tier-3 suppliers to global companies. MOD is not allowing FDI . I think this all that the MOD can do is to write out policy every year which in no way kick start meaningful defence production here.